Changes to By-Law 9.8 Professional Indemnity Insurance
Effective 8 October 2017, changes to By-Law 9.8 Professional Indemnity Insurance (PII) mean that for members in public practice:
- any PII policy must be underwritten by an APRA Authorised General Insurer unless otherwise approved by CPA Australia
- the minimum PII requirements are being reworded
- any policy issued on or after the 8 October must be cost exclusive
- the retroactive date has changed from being unlimited to a retroactive date of no later than seven years before the beginning of the period of insurance
- the policy must include coverage of directors and officers of any approved practice entity of which the member is affiliated (this was already the case but the provisions have been reworded)
- multiple automatic reinstatements following a claim have been replaced by one or more automatic reinstatements following a claim
- after a member ceases to provide public accounting services, or ceases to practice, or retires, or the member’s approved practice entity merges with another entity, the member must ensure they maintain a PII policy for a period of not less than seven years where the member’s liability for the provision of public accounting services provided will not otherwise be covered by a future policy.
It is important to note that there are no changes to the existing minimum levels of PII to be held by members.
Changes to the definition of a Public Accounting Service
Following advice from the Public Practice Advisory Committee and CPA Australia management, amendments were made to CPA Australia's By-Laws impacting public practitioners at the Friday 29 April Board meeting, taking effect on 1 May 2016.
The key change was to the definition of a Public Accounting Service, which now means any accounting, auditing and assurance, bookkeeping, consumer and commercial credit services, financial planning/advice, financial reporting, forensic accounting, insolvency and corporate reconstruction, management accounting, management consulting, taxation, transactional accounting, and valuation services.
Amendments to Public Practice By-Laws (Part 9 – Public Accounting Services)
CPA Australia's By-Laws are regularly reviewed by the Board of Directors to ensure that CPA Australia and its members are meeting all necessary compliance and statutory obligations, and that the By-Laws are consistent with the current Constitution and organisational procedures.
Following advice from the Public Practice Advisory Committee and CPA Australia management, amendments were made to CPA Australia’s By-Laws impacting public practitioners at the Friday 3 October Board meeting.
The key changes are effective from 17 October 2014.
Changes to Public Practice Certificate thresholds (prescribed amounts)
This means that a member providing public accounting services (excluding SMSF audits where no threshold applies) who has a bona fide and reasonable expectation of rendering, in the annual period in respect to which the certificate is issued, gross fees not exceeding $10,000 is not required to hold a Public Practice Certificate unless they advertise their services.
- The $25,000 (GST exclusive) prescribed amount for a member to hold a Limited Public Practice Certificate was increased to $45,000.
This means that a member providing public accounting services (excluding SMSF audits where no threshold applies) who has a bona fide and reasonable expectation of rendering, in the annual period in respect to which the certificate is issued, gross fees between $10,001 and $45,000 may hold a Limited Public Practice Certificate and pay reduced practice certificate fees.
Requirements to hold a Public Practice Certificate outside Australia or New Zealand
Subject to By-Law 9.1(c), a member may only provide Public Accounting Services within or for the Commonwealth of Australia or New Zealand (whether or not for reward) if the member holds a current Public Practice Certificate in the relevant jurisdiction. For the avoidance of doubt a practitioner providing Public Accounting Services from a country outside Australia or New Zealand for a client within Australia or New Zealand, must have Public Practice Certificates for each of the jurisdictions for which they provide the services.
This means any member providing public accounting services into Australia or New Zealand is required to hold a Public Practice Certificate no matter where they are located.
Relevant work experience to apply for a Public Practice Certificate
This means that members who have left work for family or carer duties will not be disadvantaged if they wish to apply for a Public Practice Certificate. The provisions to demonstrate that the applicant has remained up to date via CPD remain unchanged.
Use of CPA Australia Public Practice Branding and intellectual property
The use of CPA Australia Public Practice branding and intellectual property is strictly limited to authorised members who hold a current CPA Australia Public Practice Certificate. A member may not permit, enable or allow any other person whether by licence or in any other way (including but not limited to any franchise arrangement) to use the Intellectual Property of CPA Australia referred to in By-Law 9.5(f).
This means that a member must not permit any franchisee under their control to use CPA Australia Public Practice Branding or Intellectual Property unless the franchisee is an individual member holding a Public Practice Certificate who has been approved to use the branding. The CPA Australia Public Branding may only be used in association with services defined under the public accounting definition.
Notification of Professional Indemnity Insurance claims that may breach the prescribed minimum insurance requirements
A member who receives a claim for or above the minimum sum insured described in By-Law 9.8(c)(i), must promptly notify CPA Australia of the claim, the amount of the claim and sufficient claim details to enable CPA Australia to understand the nature of the claim.
This means that a member who receives a claim for $2 million ($1 million for Tasmania or NZ where Limited Liability Schemes do not exist) must immediately notify CPA Australia that a claim has been received and the background of the claim. This change allows CPA Australia to continue to monitor our obligations under Professional Standards legislation.
Quality Review Program
This means that a member seeking reinstatement of a Public Practice Certificate with an outstanding Quality Review may be required to complete a Review prior to reinstatement.
The wording of By-Law 9.5 has been adjusted to say that every member holding a current Public Practice Certificate must, for so long as the member holds the Public Practice Certificate, comply with all Quality Review requirements and successfully complete a periodic Quality Review within the Quality Review Prescribed Timeframes.
This change strengthens the requirements for a member to undertake a Quality Review within the set cycle, once again allowing speedy referral to Professional Conduct for non-compliance.
Additional minor amendments were made to the wording of the By-Laws to provide greater clarity and remove unnecessary provisions.